Sure, yet there are still a small handful of too-big-to-fail banks at the top, and a long tail of too-small-to-upgrade-their-tech-and-processes ones at the bottom.
I’d rather have 50 large banks than 5 humongous and 5000 tiny ones from a resilience and efficiency point of view.
The many small banks will buy most of the IT backend "as a service". There are a small number of vendors for this, FiServ comes to mind (1). And that industry is very concentrated - the number of competitors to FiServ for actually running a bank will be in single digits.
Offering a new payment service with different semantics to all existing ones is not only a tech/backend change, though.
The real-time aspect of FedNow has liquidity implications; the fact that it (optionally?) allows outbound push payments for consumers at a much cheaper rate than wires makes means that automated fraud prevention becomes a priority.
In other words, when you can charge $10-30 for an outgoing (and often incoming!) wire, that pays for the liquidity and manual fraud reviews (during business hours only). At roughly $0, those economics change significantly.
See also: Jack Henry and associates. We are working with both of these vendors into 2024.
It really is incredible to me the moats that some of these business leaders have been able to construct. At the end of the day, what these companies are selling is regulatory permission to use a very over priced SQL database.
> and a long tail of too-small-to-upgrade-their-tech-and-processes ones
Sounds like a business opportunity. Heh, I wonder why the market is so broken that this wasn't fixed yet, there's obviously money in dealing with money.
It's more of a people problem than anything else. Wrapping the future in a palatable package for risk adverse bankers is truly a cursed problem. Everyone needs their medicine coated in some exquisite form of custom sugar or they won't even look at it.
Traction has been acquired though. We've got word of mouth doing the rounds and customers are coming to us out of the cold.
Paperless onboarding is our bread and butter, but we are eventually going to become the single pane of glass for any branch manager or frontline employee.
Back office is our next dragon. We are saving it for last because doing front office well (I.e. paperless signed docs straight to imaging system via api) means back office workload naturally reduces.
The opportunity is bananas. More than we can deal with and you basically have a mini market per core platform. I feel like you need a really special kind of team to do what we do. Our company president is a former banker with a strong vision of what an ideal in-branch customer experience looks like. I can't imagine it working out any other way.
